Spread Betting Account

A spread betting account allows investors to bet on the outcome of a particular financial product or market. Investors bet on the “spread,” the range of possible outcomes rather than simply a win-lose outcome. A bet is placed on how one thinks the financial product or market will change in value over a given time period. You win or lose depending on how accurately you predict the movement in price.

Investors do not actually buy any stocks or other financial products in financial spread betting. A spread betting account is a type of financial derivative trading and not an actual investment in any product or market. The money is placed in a betting system rather than in companies.

High risk

Spread betting is quite risky so you should only use money that you can afford to lose for such investments. Most people use specific systems to guide them in knowing when and where to place bets. There are a number of software systems that can help investors make crucial decisions based on real-time or near real-time information. The more important spread betting software solutions include IgIndex, CmcMarkets, City index, Capital spreads, Finspreads, Sporting index, and Saxo Spreads.

Choosing the right solution

There are a number of factors to consider in choosing the right brand for your investment purposes. Some solutions provide trading platforms together with analytical tools, while others only provide the latter. IgIndex comes with guides and online seminars to help users learn the game of spread betting, and provides quotes on thousands of possible financial investments. CmcMarkets is another popular award-winning brand that allows you to trade on global markets. A comprehensive training programme is included along with around the clock customer service and support.

Placing bets

There are two types of bets that you can place in the financial markets. The long spread bet is used when you think that a price will rise in value. A short trade is used when you think that the price will fall. You can, for example, place a minimum bet of £1 per point on any investment. So, if you bet long you will make £1 for every point increase in the share price. If the price falls instead then you lose £1 per point. If the market is going against you can close your position to cut your losses or to reap your gains. 

The decision on whether to bet long or short depends on a number of factors related to the financial product or market. For example, if a company is releases a report showing worse than expected performance, the shares may drop in value. The investor must know how to carefully analyse all possible variables in price fluctuations.